Tuesday, June 2, 2009

I want to share this NYTimes video with all of you. It's a strong analysis of General Motor's decline over the past few decades and how Obama has put high stakes into the auto industry. Produced by Michael Orr, this video illustrates how Obama's stake in the industry could put his reputation on the front lines in the case of a failed re-emergence of the U.S. auto industry.

I believe that Obama could be making the right move to have faith in the American auto industry. Maintaining hope in one of America's famed industries is essential, if we are to keep cars moving out of these plants. Americans must be reassured that their investments in new vehicles will be safe, or else they will go elsewhere to buy.

In order to keep the industry moving, though, I believe that the R&D needs to be there. American cars are falling behind on hybrid and electric technology, and this type of devastating event could further hold back innovation, as a result of declining R&D budgets.

Whether GM survives over the next few years or not, the American auto industry needs to embrace new technologies, far beyond the combustion engine, and once again lead the world in technology. Without any competitive advantage, the industry will continue to fall behind.

In order to achieve innovation, the government must provide incentives for automakers, including tax benefits and green research funds. Furthermore, to get consumers hyped up about buying hybrid cars, the government must do the same for consumers... tax benefits for buying green. Some states already do this. The Department of Energy has a database of state incentives and laws related to alternative-fuel vehicles. Most of these laws apply to businesses, but some apply to personal vehicle purchases. These incentives should be raised to a federal level to further incentivize the purchase of eco-friendly cars.

What do you think? Do you believe that Obama is making wise moves in backing up the American auto industry? Or will his support of GM and other American automakers lead to his demise?